Washington is growing increasingly frustrated that its European Union allies are refusing to toughen financial sanctions that were imposed on Iran by the UN Security Council last December to pressure Iran to abandon research into the production of enriched uranium.
"Gregory Schulte, the US ambassador to the Vienna-based International Atomic Energy Agency [IAEA], the United Nations nuclear watchdog, went public with Washington's complaints, saying the Europeans should do more", the February 8 London Financial Times reported. "He drew attention to European export credit agencies that provide billions of dollars a year in help to Iran for the finance of imports."
In a February 7 speech in Munich, Schulte said: "Faced by the defiance of Iran's leadership, the European Union and European countries can do more — and should do more — to bolster our common diplomacy. Why, for example, are European governments using export credits to subsidise exports to Iran? Why, for example, are European governments not taking more measures to discourage investment and financial transactions?"
Schulte said the EU should use "the full range of non-military measures at its disposal" to direct political, economic, communications and other non-military pressure at Iran.
US companies are already barred from doing business with Iran, and a law Congress passed in 1996 authorises Washington to penalise even foreign firms engaged in commerce with the Islamic republic.
In its resolution 1737, the UN Security Council only called on UN member countries to limit financing for 10 named Iranian companies said to be linked to Iran's ballistic missile and nuclear programs.
EU officials say nothing obliges their countries to follow in US footsteps and choke off trade and economic ties with Iran beyond what is stipulated in the UN resolution. But that has not stopped Washington from trying.
As part of laying the propaganda and diplomatic groundwork for a planned Iraq-style "regime change" invasion of oil- and-gas-rich Iran, Washington has been pushing for several years now for the Security Council to impose a full-blown sanctions regime against Iran.
Iran's refusal to renounce its right — guaranteed to be "inalienable" in the nuclear Non-Proliferation Treaty (NPT), of which both the US and Iran are signatories — to enrich uranium for use as nuclear fuel has been used by Washington to allege that Iran has a secret nuclear weapons program.
Refined uranium ore only contains about 0.7% of the fissile uranium-235 isotope. The fuel rods needed for nuclear-power plant require uranium enriched with a U-235 content of about 5%, the achievement of which involves an extremely complex production process. Nuclear weapons require enrichment to at least 80% U-235.
According to the IAEA, Iran has only been able to produce a few grams of fuel-level enriched uranium. The IAEA monitors Iran's nuclear program to verify its compliance with the NPT.
Reuters reported on January 30 that a US government official told the wire service Washington was resigned to the fact that getting another UN resolution with tougher sanctions against Iran, as US negotiators had originally hoped for, would be nearly impossible because of Russian and Chinese opposition.
Reuters also reported that it was told by "a senior Western diplomat" that a "number of countries, especially Russia, feel the United States is bullying them to end even legitimate business with Iran due to the nuclear dispute".
In December, Moscow supported the Anglo-French drafted UN resolution imposing limited sanctions against Iran.
But that support came only after an initial proposal was dropped that would have imposed curbs on Iran's Bushehr nuclear-power plant, which Russian engineers are helping build under a US$1 billion contract.
Nuclear fuel is due to be delivered from Russia to Bushehr in March and the station is scheduled to start working in September, with the first electricity being produced in November. Iran wants to produce its own nuclear fuel, from its own uranium ore deposits, rather than importing it.
Associated Press reported on February 8 that EU officials told AP that in recent weeks calls had been made by US Treasury or embassy officials on European banks and oil companies to get them to cut back on dealings with Iran.
"All the [European] oil companies will tell you that they are having regular visits from the US embassies in their countries", an EU oil industry consultant told AP.
"Nobody in Europe is going to give up the opportunity of doing business with Iran just for the sake of pleasing the Americans", the consultant added. Total EU trade with Iran was $25.85 billion in 2004, the last year for which complete figures are available.
Iran is seeking large foreign investments to modernise its oil and gas industries. AP reported that the US embassy in Vienna acknowledged Washington "encourages companies to consider whether such investments will really be stable over the long term". After the US-led invasion of Iraq in March 2003, Washington's occupation regime cancelled all the oil industry contracts signed between Iraq and non-US firms.